Aitsan Limited & Ors v Stuart Robert Duffy & Anor

Where a fraudulent misrepresentation induces a later completion payment under an existing property contract, the loss is the payment induced by the fraud. Benefits obtained from the transaction, including proceeds of a later sale, must be credited. But the whole sale proceeds should not automatically be set against that payment where their value also reflects earlier payments which the fraud did not induce. The court must exercise judgment to avoid both overcompensation and under-compensation. On these facts, the appropriate credit was the proportion of the sale proceeds corresponding to the completion payment’s proportion of total payments. An appellate court may admit a new point where it requires no new evidence or different trial, the respondent has had adequate time to meet it, and no detriment has resulted.

The appellants acquired student-flat units off plan. After paying deposits and other sums, they paid completion payments in reliance on fraudulent completion certificates signed by the first respondent, an architect. The flats were unfinished, and the appellants later sold their leases.

Master Pester found that the completion payments were direct losses caused by deceit, but required credit for the lease-sale proceeds and rejected credit for the earlier payments. Some claims were therefore assessed at nil. A previous appeal had dismissed the liability challenge, allowed the quantum challenge and directed a damages assessment. Permission for this appeal was limited to the treatment of the earlier payments. The central issue was whether the sale proceeds should be credited in full, treated as reflecting all payments, or apportioned.

Appeal allowed. The Chancellor substituted an apportionment of the sale proceeds for the full credit against the completion payment. The figures and costs were left for further determination.

1. Procedural points. Although the pleadings were outdated, the Schedule of Loss set out the relevant positions and the issue had been decided on its merits below. The issue was therefore open on appeal. The new apportionment argument had not been advanced below, but it was admitted under the principles in Singh v Dass [2019] EWCA Civ 360. No new evidence was required, the trial would not have been conducted differently, the respondent had adequate time to address the point, and he had not acted to his detriment because it was omitted. The omission could also be considered on costs.
2. Measure of loss. The misrepresentation occurred part way through the contract. It induced the completion payment, not the acquisition of the property as a whole. The completion payment was therefore a direct loss caused by the deceit. The principles in Smith New Court v Citibank [1997] AC 254 required benefits obtained from the transaction, including sale proceeds, to be taken into account. Ignoring the sale proceeds would be wrong.
3. Apportionment. Applying the whole sale proceeds as a complete credit against the completion payment would also be wrong because the realised value derived partly from the earlier payments. Giving full credit for those earlier payments was wrong for the converse reason: those payments were not induced by the fraud and the loss could not exceed the sum lost. The court distinguished the factual context from cases such as Glossop Cartons and Print Ltd v Contact (Print & Packaging) Ltd [2021] EWCA Civ 639, where the misrepresentation preceded the contract.
4. The exercise was not mechanical. On these facts, the fairest approach was to apportion the sale proceeds in the ratio of the completion payment to the total payments. For Aitsan, one quarter of the £32,000 sale proceeds, namely £8,000, was credited against the £13,000 completion payment, producing a loss of £5,000. This was neither the contractual measure of loss nor consequential loss.
5. The respondent’s later-insolvency counterfactual was rejected because it was inconsistent with the lower court’s findings that the completion payment was the loss caused by the deceit. The assessment was compensatory, not punitive. The appeal was allowed and the parties were to address the resulting figures and costs.

• Chancery Appeals: On appeal from Master Pester, the Chancellor allowed the appeal and substituted an apportionment approach. The judgment is reported at [2026] EWHC 1993 (Ch) .
• Master Pester: On 18 March 2025, damages were assessed after the liability decision. Completion payments were treated as direct losses, sale proceeds were credited in full, and earlier payments were not credited.
• HHJ Keyser KC: The liability appeal was dismissed, but the quantum appeal was allowed and damages were directed to be assessed.